A small utility charge offers big payoff

John O'Boyle/The Star-LedgerGov. Chris Christie's administration has apparently been pushing to cut back on the Societal Benefits Charge.

By R. William Potter

How do we explain the rash of attacks from critics on the left and right against the Societal Benefits Charge?

For the past few years, an informal alliance of ratepayer activists and large energy users — apparently backed by the Christie administration — has been pressing the Board of Public Utilities to cut back on the SBC, which appears on every gas and electric customer’s utility bills as a "surcharge."

While the amount of money raised by the SBC is undeniably huge — more than $700 million last year — the effect on individual customer bills is modest, "approximately 3.8 percent," according to the BPU website. This translates into an annual bite of about $56 a year for a residential electricity user and $51 for gas customer, or about 15 cents a day.

Moreover, not even the fiercest SBC critic has openly disputed that the surcharge finances important societal programs. These include a Universal Services Fund dedicated to helping the poor and jobless pay their utility bills and avoid freezing in the dark, as sometimes happened before the start of these social programs.

There’s also a nuclear plant decommissioning fund held in a trust account for the safe cleanup of New Jersey’s four nuclear reactors after they are finally retired, starting with Oyster Creek — the oldest commercial reactor in the nation still operating — in 2019.

Who can be against setting aside funds paid by current users of the power produced by these nuclear units to pay for safe cleanup when they are finally deactivated?

Another part of the SBC goes to the remediation adjustment clause, or RAC, for short. The RAC funds another important cleanup program. This one removes toxins left in the ground and water from the old practice of making natural gas in coal gasification plants long ago shuttered and scattered around the state.

The SBC also underwrites the cost of consumer education, intended to help ratepayers sort through the complex issues of customer choice following the breakup of traditional utility monopolies.

Finally, we come to the most vocal aspect of the anti-SBC controversy: About a third of the surcharge is spent on New Jersey’s hugely successful Clean Energy Program, going to energy efficiency improvements and renewable energy development.

The larger portion by far goes to energy efficiency — a vast menu of energy-saving investments, from the latest compact fluorescent bulbs and attic insulation to heat pumps and dozens of other devices that cut utility bills wherever they are installed, while also reducing everyone’s costs by slicing into peak-load demand for the electric power and gas.

In fact, the BPU website says that every dollar invested in residential energy efficiency "returns $4 in savings . . . and $11 in savings for commercial and industrial customers."

Meanwhile, renewable energy programs, especially solar photovoltaic electric systems, accounts for a dwindling portion of the SBC, down to 4.5 percent, according to the BPU.

With all this going for it, why are there so many — or any — attacks on the SBC?

I have a theory that’s illustrated by an old joke:

A policeman comes upon an inebriated man on all fours under a street light. "What are you doing?" he asks. "I’m looking for my cuff links," comes the reply. Being a kindly sort, the officer drops to his knees and helps with the search. After a few minutes, the policeman asks "where exactly did you lose them?" "Over there," the man answers, pointing into the darkness. "Well, why are you looking here?" the angered cop asks. The answer: "Because the light’s better here."

And so it is with the SBC. For many years, the varied functions of the SBC were hidden from view in utility bills, but the 1999 deregulation required the unbundling of bills into their parts. Hence, the appearance of the SBC. starting a decade ago.

Note to regulators and politicians: If 96.2 percent of utility charges are someplace other than under the streetlight shining on the SBC, brave the dark and look there for cost savings. And don’t cut the SBC, which can be a big part of the solution to high energy costs.

R. William Potter is a partner in Potter & Dickson, a Princeton-based law firm. This article first appeared on NJSpotlight.com, an online news site.